2024-03-27 19:33:09
The fourth in Bitcoin history will be due in mid-April – the first following ETF approval – halving. Why is this necessary and what effect does it have on the value of cryptocurrency? Our article reveals!
The cryptocurrency community has its eyes on the upcoming Bitcoin Halving is nailed down, which will take place in mid-April.
This event occurs roughly every four years and is the fourth time in Bitcoin’s history that it has occurred. As part of the halving, the rewards for approving (ie mining) blocks added to the Bitcoin blockchain are halved. This reduces the number of new Bitcoins entering the system, and the amount of mined coins is even closer to the maximum supply of 21 million.
What happened following the previous halves?
The first halving took place on November 28, 2012, following the first 210,000 blocks were mined. As part of this, the reward for mining a block has been reduced to 25 coins. After another 210,000 blocks, the reward was reduced to 12.5 Bitcoin on July 9, 2016, and as of May 12, 2020, the same amount was only worth 6.25 BTC. As part of the upcoming halving, the reward will be reduced from 6.25 to 3.125 BTC. This process continues until 2140, when the final halving will release the last batch of tokens and all 21 million coins will be released.
Source: Morningstar
By reducing the amount of reward for mining new blocks on the blockchain – which is essentially a costly process and requires high-energy computers – the willingness to For Bitcoin mining too. For this very reason, the halving caused a supply shock in the past, which in turn led to greater interest and speculation.
In general, halvings seem to have been associated with price increases in the past. In the six months following the last two BTC halvings, the coin’s price increased by 51% and 83%, respectively, according to data from cryptocurrency tax consultancy CoinLedger. In addition to the truth, the value of Bitcoin was still far from what it is now: in 2016, one BTC cost $650, and in 2020, it cost $8,572.
Why can this halving be different?
The market dynamics before the halving are unique in cryptocurrency history, which prompts consideration of the accompanying effects, reads a study published last week by the research group of the first European crypto ETP issuer, 21Shares.
The researchers found that the effect of the halving diminished over time, and successive halvings led to a decline in exchange rate growth. What does it mean exactly? BTC increased roughly 5,500% in the four years following the first halving, roughly 1,250% in the next halving cycle, and roughly 700% in the current cycle. From this we can conclude that the market is becoming more and more mature towards BTC.
Bitcoin is also currently near an all-time high, while trading 40-50% lower than all-time highs during previous halvings.
One of the biggest developments in the current cycle is the launch of the first exchange-traded fund (ETF). BTC spot ETFs attracted incredible trading volume, which clearly showed the interest of “traditional investors”. On March 13, 2024, a new record was set, with more than $1 billion flowing into the ETF in a single day,” said 21Shares.
The authors of the study believe that the joining of institutional actors will reshape the general “habits” of BTC investors. Long-term holding is becoming more and more important, as evidenced by the fact that the amount of Bitcoin available on exchanges is at a five-year low.
“If this trend were to continue, the BTC supply would become more and more constrained, and this would allow for a narrowing of the supply, as a result of which the exchange rate would rise significantly,” say the analysts.
Perhaps unsurprisingly, 21Shares is optimistic regarding Bitcoin. However, it is certain that the current supply and demand dynamics are completely different from the previous ones.
Bitcoin Minetrix – An unconventional way to mine Bitcoin
As mentioned before, Bitcoin mining is quite expensive and it will only get more expensive. However, a brand new project offers a revolutionary change: a Bitcoin Minetrix puts mining on a new foundation through the stake-to-mine protocol. In recent years, it has been almost impossible for a retail investor to get into Bitcoin mining, as hardware and energy prices have risen significantly. Bitcoin Minetrix offers a solution for exactly this: it allows investors to use their tokens to generate mining power.
The project was the first to create the stake-to-mine protocol. As part of this, Bitcoin Minetrix owners can pledge their BTCMTX tokens in exchange for mining energy. In this way, investors can earn Bitcoin passively, and they can do all this without expensive equipment. There are no costs other than buying tokens.
I’ll check out Bitcoin Minetrix
Top 10 European Bitcoin ETPs
Name
Ticker
Total return YTD
Full return 1 year
Managed assets (million EUR)
ETC Group Physical Bitcoin
BTCE 58.82% 129.16% 1,362
XBT Provider Bitcoin Tracker EUR ETN
Bitcoin XBTE
65.17%
144.84%
1,146
XBT Provider Bitcoin Tracker One ETN
BITCOIN XBT
65.01%
143.83%
912
CoinShares Physical Bitcoin (BTC)
BITC
57.97%
132.58%
813
21Shares Bitcoin ETP
ABTC 59.52% 131.30% 682
WisdomTree Physical Bitcoin ETC
BTCW
58.00%
132.63%
541
VanEck Bitcoin ETN A
VBTC
58.23%
135.13%
421
Invesco Physical Bitcoin ETN
BTIC
58.00%
132.69%
202
SEBA Bitcoin ETP
SBTCU
51.57%
124.35%
118
21Shares Bitcoin Core ETP
CBTC 59.97% 134.29% 73
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**Attention! Our article above is guest content and does not constitute investment advice. The editors of BitcoinBázis do not take responsibility for what has been described and urge all readers to be extra cautious in relation to cryptocurrency, CFD, token, cryptocasino, metaverse, DeFi, play-to-earn and ICO/STO/SAFT investments. Individual research and thorough verification of claims is highly recommended. Trade and play responsibly.**
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